Larry Ellison's Softwar: The War to End All Wars?

Larry Ellison is the last of the accomplished first generation founder/CEOs to step down. Larry and Oracle’s impact in IT has been remarkable and will persist for years to come. Although IBM was responsible for developing the relationship architecture that made relational databases tick (Codd and Date), Larry and Oracle emerged as the most successful vendor of RDBMS products. IBM, Informix, Sybase, and Oracle competed intensely during the 1990s and marketing messages sometimes got personal. Whether or not nature or nurture was the driving force behind Larry is hard to say but the result was that Oracle established market leadership thorough a combination of continuous product innovation and faster cycle times. The impact was that Oracle rose to become the largest RDBMS vendor in the world.

Oracle continues to drive high levels of innovation into its database which has allowed the company to remain differentiated as the relational market matured while simultaneously justifying a price premium for their product. While Oracle has become a company that customers love to hate, data management is so mission critical to every organization that data management products have an incredible stickiness. This combined with the fact that it’s hard to get sacked by recommending Oracle has helped Oracle gain an amazing amount of account control. As Oracle’s database business began throwing off an increasing amount of cash, this has helped Oracle expand into a variety of related markets through internal development and acquisition. However, this expansion has not been easy. Oracle’s efforts to build an application server largely failed resulting in the acquisition of BEA and their market leading product. While this is a story that would be played out repeatedly regarding technology, Oracle marketing must be given significant credit for focusing attention on the positives. Larry’s obsession with being #1 and making sure there was appropriate market awareness around these facts and claims is legendary. But it’s hard to argue with the results.

It’s been reported that Larry will continue on at Oracle as CTO despite relinquishing his CEO responsibilities to Mark Hurd and Safra Catz. Larry has effectively been acting CTO for many years, so this aspect of his role is not changing. However, there has been a significant amount of turnover across the senior development team. Steve Harris, Ted Farrell, Chuck Rozwat, and Hasan Rizvi have all moved on from their senior development roles leaving only Thomas Kurian and Andy Mendelsohn to provide continuity. Fortunately, Thomas and Andy are revered by Oracle developers and buffer the team from the more polarizing personality of their CTO. Therefore, it is especially important for Oracle to keep its senior development managers in place to ensure product stability as the market adjusts to how Oracle will perform going forward.

The outlook for Oracle is challenging. The market has changed significantly. While Oracle was clearly a pioneer in relational databases, Oracle does not have the same reputation in middleware and cloud services. When the disruption of pioneering cloud vendors like Amazon, Google, and Salesforce combined with the accelerating interest in open source software is taken into account, it is clear that Oracle is facing a more complex collection of threats. There has been a relentless turnover in Oracle’s senior sales staff over the last several years suggesting that market pressures are rising. The good news is that Oracle is cash rich and understands how to acquire companies. Ed Screven, Oracle’s chief architect, is also a brilliant engineer. As a result, Oracle has the capacity and talent to find a path forward that will enable them to remain competitive and satisfy the high standards set by their founder.

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